Why Oil And Gas Company Talos Energy Shares Are Trading Higher Today

Talos Energy Inc TALO shares are trading higher after it penned an acquisition deal with QuarterNorth Energy Inc. worth $1.29 billion.

The price consideration comprises around $965 million in cash and 24.8 million of Talos’s shares.

The board of directors of both Talos and QuarterNorth have unanimously approved the deal, which is expected to close by the end of Q1 2024, subject to certain customary closing conditions and regulatory approvals.

With the deal, TALO will add expected production of around 30 thousand barrels of oil equivalent per day (MBoe/d) in 2024, averaging about 75% oil from about 95% operated assets.

The company anticipates QuarterNorth average daily production of about 30 MBoe/d (75% oil), including planned downtime for 2024. 

Also, the transaction will add proved reserves of around 69 million barrels of oil equivalent (MMBoe) with a PV-10 of $1.7 billion.

TALO projects the transaction to be accretive to key financial metrics and generate annual run-rate synergies of around $50 million in 2024, with about half of the synergies to be achieved throughout 2024 and full run-rate savings by year-end 2024.

Timothy S. Duncan, TALO’s President and CEO said, “The addition of QuarterNorth’s overlapping deepwater portfolio with valuable operated infrastructure will increase Talos’s operational breadth and production profile while enhancing our margins and cash flow.” 

“This Transaction aligns with Talos’s overall strategy of leveraging existing infrastructure and complementary acreage to accelerate shareholder value creation. The pro forma footprint in the U.S. Gulf of Mexico should allow us to capture meaningful operating synergies.”

Also Read: Talos Energy Clinches Gulf of Mexico Acreage, Forges Lease Exchange Agreements With Oil Giants

As of September 30, 2023, Talos had around $752.9 million of liquidity and approximately $13.6 million in cash.

Price Action: TALO shares are up 0.44% at $13.57 premarket on the last check Tuesday.